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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (date of earliest event reported) November 11, 1998.
NewStar Media Inc.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-24984 95-4015834
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(Commission File Number) (IRS Employer Identification No.)
8955 Beverly Boulevard, Los Angeles, CA 90048
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(Address of Principal Executive Offices) (Zip Code)
310/786-1600
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events
On October 13, 1998, The Nasdaq Stock Market, Inc. ("Nasdaq") informed the
Company that the Company's Common Stock would continue to be listed on the
Nasdaq SmallCap Market pursuant to the following exceptions: On or before
November 16, 1998, the Company must make a public filing with the Securities and
Exchange Commission and Nasdaq that contains a September 30, 1998 balance sheet,
with pro forma adjustments for any significant transactions or events occurring
on or before the filing date, and evidencing a minimum of $2,700,000 in net
tangible assets. In addition, on or before January 11, 1999, the Company must
achieve a bid price of $1.00 per share or greater, and the closing bid price
must meet or exceed $1.00 per share for a minimum of the next ten consecutive
trading days.
As of September 30, 1998, the Company's balance sheet showed net tangible assets
of $2,256,000. Since September 30, 1998, the following events have occurred.
On November 12, 1998, the Company authorized the issuance of 189,146 shares of
Common Stock to Media Equities International, LLC as payment of $107,000 of
accrued dividends on the Company's preferred stock. The shares were issued at
the average closing price of the Common Stock as reported on the Nasdaq SmallCap
Market for the five days prior to and including November 11, 1998.
On November 11, 1998, the Company entered into an agreement (the "Securities
Purchase Agreement") with Apollo Partners, LLC ("Apollo") and Ronald Lightstone
("Lightstone") pursuant to which Apollo and Lightstone agreed to purchase
472,879 shares of Common Stock of the Company at a purchase price equal to
$0.719 per share.
Pursuant to the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated
as of July 30, 1998, among the Company, Apollo and Lightstone, the Company sold
3,824,757 shares at $1.438 per share (i.e. and aggregate of $5,500,000). The
Stock Purchase Agreement provided that, if the Company's stock is delisted from
the Nasdaq SmallCap Market, the purchase price would be adjusted to equal the
average of the closing prices of the Company's Common Stock for the five days
following the date that the stock is delisted, but in no event less than $0.719
per share. In consideration of the purchase of shares pursuant to the Securities
Purchase Agreement, the Company has granted to Apollo and Lightstone the option
to adjust the purchase price of the shares purchased pursuant to the Stock
Purchase Agreement effective, at the option of Apollo and Lightstone, at any
time during the period commencing on November 16, 1998 and ending on January 10,
1998. If such option is exercised, the adjusted purchase price will be $0.719
per share.
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As a result of the sale of the shares to Media Equities International, LLC and
to Apollo and Lightstone, pro forma net tangible assets of the Company at
September 30, 1998 were $2,703,000. Accordingly, the first criteria imposed by
Nasdaq for the continued listing of the Company's Common Stock on the Nasdaq
SmallCap Market has been satisfied.
Item 7. Financial Statements and Exhibits
The unaudited pro forma balance sheet for three months ended September 30, 1998
presented below is presented as if, at the beginning of the period, the sale of
the 472,879 shares to Apollo and Lightstone and the 189,146 shares to Media
Equities International, LLC had occurred. This pro forma balance sheet should be
read in conjunction with the Company's financial statements and the related
notes thereto. The pro forma financial information is not necessarily indicative
of the results that would have been reported had such events actually occurred
on the dates specified, nor is it indicative of the Company's future results.
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<TABLE>
NEWSTAR MEDIA INC.
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1998
<CAPTION>
As reported Adjustments Pro Forma
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ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 210,000 $ 340,000 (1) $ 550,000
Accounts receivable, net of allowances of $607,000 4,113,000 4,113,000
Inventory 2,291,000 2,291,000
Film costs 88,000 88,000
Due from related party 89,000 89,000
Prepaid expenses and other assets 800,000 800,000
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Total current assets 7,591,000 340,000 7,931,000
NON-CURRENT ASSETS
Production masters 1,400,000 1,400,000
Film costs, net 4,940,000 4,940,000
Property and equipment, net 1,098,000 1,098,000
Goodwill and other assets 5,931,000 5,931,000
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Total non-current assets 13,369,000 - 13,369,000
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Total assets $ 20,960,000 $ 340,000 $ 21,300,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 5,645,000 $ $ 5,645,000
Notes payable 16,000 16,000
Advances and deferred income 195,000 195,000
Accrued dividends 107,000 (107,000)(2) -
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Total current liabilities 5,963,000 (107,000) 5,856,000
NON-CURRENT LIABILITIES
Notes payable, less current portion 6,322,000 6,322,000
Accrued liabilities 649,000 649,000
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Total non-current liabilities 6,971,000 - 6,971,000
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Total liabilities 12,934,000 (107,000) 12,827,000
SHAREHOLDERS' EQUITY
Preferred stock $.01 par value; 2,000,000 shares authorized and
220,060 shares issued outstanding, liquidation preference
$6,881,000 (as reported) and $6,774,000 (pro forma) 2,000 2,000
Common stock $.01 par value; 20,000,000 shares authorized and
11,337,625 (as reported) and 15,824,407 (pro forma) shares
issued and outstanding 113,000 447,000 (1),(2) 560,000
Additional paid-in capital 35,269,000 35,269,000
Accumulated deficit (27,358,000) (27,358,000)
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Total shareholders' equity 8,026,000 447,000 8,473,000
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Total liabilities and shareholders' equity $ 20,960,000 $ 340,000 $ 21,300,000
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</TABLE>
See notes to pro forma consolidated balance sheet
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NEWSTAR MEDIA INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1998
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(1) Reflects issuance of 472,879 shares of Common Stock sold to Messrs. Elkes,
Gorman and Lightstone for cash of $340,000. The purchase price of the
common stock was $0.719 per share.
(2) Reflects issuance of 189,146 shares of Common Stock in payment of dividends
declared on November 11, 1998 issued at the average closing price of common
shares for the five days up to and including November 11, 1998.
(3) On a pro forma basis, net tangible assets at September 30, 1998 are
$2,703,000 calculated as follows:
Pro forma equity $ 8,473,000
less: Intangible assets 5,770,000
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Pro forma net tangible assets $ 2,703,000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEWSTAR MEDIA INC.
Date: November 13, 1998 By:/s/ RONALD LIGHTSTONE
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Ronald Lightstone
President and Chief Executive Officer
Date: November 13, 1998 By:/s/ Neil Topham
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Neil Topham
Chief Financial Officer
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